How to prepare for a quick home sale as mortgage rates rise!
Originally Published in the Washington Post on June 29,2022
We asked Craig McCullough, principal for the Catalyst Group at Compass real estate in D.C., and Lindsay Reishman, founding partner of the Reishman Group and Pareto in D.C., for advice for sellers in a hurry. The following was edited for length and clarity.
Q: Some buyers may be in a rush to buy now before rates go higher. So what can sellers do to accelerate their presale prep?
McCullough: First, make a plan with the team. Many sellers rush to get done what they think is best, then they call their agent. This is the wrong order. Call your agent first. Together you can prioritize items to be done and save yourself wasted projects that won’t improve value.
Next, focus on high-return items first. Kitchen or bath updates are the best. Since time is key here, focus on the quick things, like replacing outdated cabinet hardware, sink faucets, pendant lights, etc.
Once these items are addressed, focus on things that won’t increase value but will market the house better. A neutral paint color is not likely to increase a home’s value, but it is certainly going to make buyers interested a lot faster if they don’t have to dread painting the house.
Lastly, make sure the space is neat, clean and clear of excess. You may be fine with a coffee maker, soda stream, tea kettle, knife block, canisters, etc. on your kitchen counters. I promise you buyers are not. They respond best to clear and open space. Apply the same logic to living spaces. The tchotchkes in your home may be neutral and you may not notice them because you see them daily, but buyers will feel cramped and overwhelmed. You have to pack them eventually to move, just do it early.
Also, a word of advice: Call your agent as soon as possible and use their network. I have been able to get my contractors in and out for a full kitchen and bathroom renovation in two weeks. Why? Because your agent has pull with these contractors from all the referrals they send. Just ask for help.
Reishman: Good presentation and reasonable pricing are the keys to selling quickly. Two things you can do to accelerate the process are 1. Put your listing into the MLS with a “coming soon” status while you do the work. We aren’t allowed to show the property when the status is “coming soon,” but this allows agents to get your listing on their buyers’ radar, so they’re teed up and ready to go once you go live with the listing. 2. Hire help. There are companies that specialize in managing the process, so when we’re on a short timeline and have clients with a lot that they need to coordinate, we’ll pay to have an outside company come in and oversee the process (Wayforth.com is an example of a company like this). They will coordinate with painters and movers, get quotes, help pack, etc.
Q: How are sellers adapting to rising rates?
McCullough: Most sellers are still holding strong on price, despite rising rates. The length of time and number of bidders have changed. Homes are taking longer to sell and usually you see one strong offer, not the bidding wars we were seeing consistently before. A property priced right will get its list price, as long as the seller is patient.
Reishman: There's still very little supply and quality houses are in high demand, so no incentives are needed. The biggest difference I see is that sellers are initiating the sales process earlier to allow buyers to lock in lower rates. As an example, I have clients who are buying a house that is being built in upper Northwest D.C. and will deliver in October. Instead of waiting to sell their house in the fall, we're privately listing it now, so buyers could lock in a rate and close on it, then rent it back to the sellers as needed.
Q: Are sellers still getting multiple offers? Is there a strategy they’re using to encourage that?
McCullough: Sellers should no longer expect multiple offers. It’s still happening, but with much less frequency. The only way to encourage this is to price low, but you also risk only one offer coming in at the low price. Right now, patience and realistic expectations are key.
Sellers should have their agent partner with a local lender to set up special financing. Many lenders will offer incentives to be advertised with the listing. This is a win for the buyer and a win for the seller. It only takes a phone call.
With rates in flux, many buyers have been shopping at the top of the approved price range. A good listing agent should be vetting the buyer’s lender and preapproval guidelines carefully. If a seller accepts an offer and the slight rate change makes the house no longer affordable, the buyer gets out and the seller has a now tainted property. Verify the buying power of the buyer before accepting an offer.
Reishman: Yes, we’re still seeing multiple offers. Our strategy continues to be making sure that the property shows great and pricing it fairly — don’t get overly greedy with the list price, but let the market dictate the value.